What are the Best Practices for CAM Reconciliation?

Best Practices for CAM Reconciliation

CAM is the standard area maintenance charge passed on to the tenants. CAM charges typically include the upkeep of internal and external common areas of the property. There is no unified template for CAM cost for properties, and it depends on the property, landlord, and market value.  CAM costs are beneficial for the landlords/property owners to accelerate their return on investment. It costs to own and manage a property, and the recovered CAM charges go towards the property maintenance.

While each lease is different, some of the fundamental CAM charges include,

  • The salary of the security and property staff
  • Repairs and janitorial services
  • Permits, property tax, and management fees.
  • The cost of CAM is to maintain the property.

Top 5 Best Practices of CAM Reconciliation

1. Carefully Review and Document the Expenses

Reviewing the expenses is time-consuming and a tedious process. However, it is a crucial step to go through the CAM reconciliation process of property expenses meticulously. Reduce significant errors in CAM reconciliation by matching the invoices with their respective account or the property. 

Some of the practical steps to review the expenses are

  • To categorize the expenses month by month,
  • Verify and note missing invoices from vendors
  • Compare the current CAM report with the previous year’s reports.

It isn’t easy to resubmit the missed CAM charges to tenants for reimbursement or credit due.

2. Property Management Fees

Most real estate firms utilize an independent property management firm or an internal team. Either way, be sure to include the management fees in the CAM cost reconciliation report. A very few tenants might have a problem paying the property management fee. When you go lenient for few tenants, you will end up with

  • An unbalanced ledger and
  • Shows poor precedent.

The property management fees range from 3% to 4% of the lease amount.

3. Validity and Accuracy of CAM Fee Calculations

Double-check the expenses before presenting them to the tenants. Ensure that the charges are accurate and verified with the appropriate account or the building. For example, in some instances, based on the lease agreement, a real estate firm can include capital investment improvements in the CAM costs. Therefore, before the submission of final CAM charges to tenants, make sure to capital investment improvements. Things to look for before presenting the CAM costs,

  • Calculate the months of a tenancy
  • Triple check the pro-rata share and
  • Stipulate expenses based on the occupancy level.

4. Expect Lease Audits

It is rare to witness a conflict between a landlord and tenants. In any case, it is proactive to be ready for an audit. To avoid any discrepancy during the lease audit,

  • Calculate the distribution share
  • Check the actual costs charge and
  • Code the invoices with their property.

A lease audit service provider can provide a premium lease abstract, thorough lease audits, and protect the firm from any legal issue.

5. Timely Invoice

An invoice generation should be a priority task that happens on a timely basis without any delay. A delayed invoice shouldn’t be the technicality for tenants holding out the payments. How to ensure timely CAM cost payments,

  • A scheduled CAM invoice generation and
  • Remind the tenants of the CAM charges.

Maintaining a considerable property portfolio is an immense task, let alone the CAM cost recovery process.  A detailed CAM cost report can streamline the entire workflow and manage multiple assets efficiently. In addition, streamlining can drastically reduce the workload of property managers.

Benefits of Outsourcing CAM Reconciliation

Everyday operations of a real estate firm deal with countless vendors, property improvements, occupants, and invoices. It is an uphill task to review and organize the expenses based on property and events. Though a real estate firm can handle the process, the CAM cost calculation calls for utmost accuracy and time. Outsourcing the CAM reconciliation to a service provider offers

  • An accurate estimate of tenant’s pro-rata share
  • Legible CAM reconciliation report
  • Uncover overestimated or underestimated charges
  • Avoid future disputes between landlord and tenants

PreludeSys is a successful service provider for over a hundred clients worldwide. Partnering with PreludeSys for all lease-related services will give the real estate brand an upper hand with effective decision-making and future developments. 

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